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The right to use versus the right to sell: Spillover effects and constraints on the water rights of irrigation organization members
Author(s) -
Miller Kathleen A.
Publication year - 1987
Publication title -
water resources research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.863
H-Index - 217
eISSN - 1944-7973
pISSN - 0043-1397
DOI - 10.1029/wr023i012p02166
Subject(s) - spillover effect , irrigation , water right , water trading , business , economics , water use , value (mathematics) , water conservation , microeconomics , water resources , mathematics , ecology , biology , statistics
Irrigation organizations often place restrictions on individually arranged water sales to outside parties. It is shown that these restrictions may be consistent with efficient water use and transfers in cases where individually arranged transfers would impose detrimental spillover effects on other members of the organization. Joint optimization in the presence of spillover effects implies that organization level water trading activity will increase with an increasing market price of water and will decrease with an increase in the internal net marginal value of water. Regression analysis and other empirical evidence are found to be consistent with these implications. These results suggest that irrigation organizations engage in efficient water transfers on behalf of their members and that locally imposed restrictions on individual water transfers are not necessarily economically inefficient.